1.

Current Assets = P520,000

Current Liabilities = P120,000

520,000-20,000
120,000-10,000-10,000
= 500,000
100,000
= 5:1

A is also correct, but understating cash and liabs without source documents is a
fraudulent act which is prohibited by laws.

2. B.
S1 and S3 are correct.

3. C.

4. C.

N/P = P200,000
Personal notes (not assumed) = 40%
Therefore, 60% of N/P will be assumed by the partnership.

200,000 x 0.60 = P120,000

5. A.

Dela Cruz, unadj. Bal.: P1,800,000

Removal of acc. Dep. (combined) 500,000
Decrease in bldg. value (200,000)
Decrease in eqpt. Value (200,000)
Decrease in land value (375,000)
Removal of Allow. For Doubtful Accts. 25,000
Removal of 40% of N/P 80,000
Dela Cruz, adjusted capital P1,630,000

Collantes will invest cash equal to 1/5 of DC’s capital after adjustments.

= P1,630,000 x 1/5
= P326,000
 6. D.
ParCor book, page 452.

7. C.

150 share options x 500 employees x P100 FV at grant date

=P7,500,000 total expense to be allocated over the vesting period
(formula and discussions about equity-settled share-based payment transactions
on page 280 of ParCor book.)

=7,500,000 / 5 yrs. Vesting period

= P1,500,000 per annum

Share Options Outstanding is an equity account, so the said account title is not
closed with Income Summary at the end of the reporting period and the expense
recognized within the vesting period is accumulated in this account until the
options are exercised or cancelled at the vesting date.

=P1,500,000 x 3 yrs.
=P4,500,000 Sh. Opt. Outstanding as of 12/31/2015

8. A.

Net Income is P1,000,000.

John Lloyd Shaina Total

Salaries 50,000 - 50,000
Interest 20,000 25,000 45,000
Bonus* 43,095 43,095
Residual Profit
(P1,000,000 –
50,000 – 45,000 –
43,095) = P861,905
To J.Lloyd (1/2) 430,952.50
To Shaina (1/2) 430,952.50 861,905
TOTAL P500,952.50 P499,047.50 P1,000,000

*B = 0.05 (1,000,000 – 95,000 – B)

B= 0.05 (905,000-B)
B= 45,250 – 0.05B
Transpose.
1B + 0.05B= 45,250
1.05B = 45,250
 1.05 1.05
Bonus = 43,095
9. A.

John Lloyd Shaina

Beg. Capital Balances 200,000 250,000
Share in Profit 500,952.50 499,047.50
Annual Withdrawal (60,000) (60,000)
Ending Capital Balances 640,952.50 689,047.50

10. D.
11. D.
12. C.
13. C.
14. B.
15. B.
S1 and S3 are incorrect.
16. D.
17. C.

900,000 x 25%
=P225,000

Because it is a direct purchase of capital interest, gain or losses on selling the

portion of Gravador’s capital will not be recognized in the books because the
transaction did not affect the assets and liabs of the partnership. The transaction
is between Dagondon and Gravador only, not Dagondon and the partnership.

18. A.
19. B.

ParCor book, page 289.

20. D.

Total Contributed Bonus Total Agreed

Capital Capital
Fedelin 200,000 62,500 262,500
Brillantes 400,000 37,500 437,500
Diaz 400,000 25,000 425,000
Echarri 500,000 (125,000) 375,000
Total Cont. Capital 1,500,000 0 1,500,000
 New P&L ratio:
Echarri’s Capital Interest is 25% or 25/100, if expressed in lowest term, ¼.

4/4 – 1/4 = 3/4

The ¾ remaining is allocated over the old partners’ P and L ratio.

Fedelin: 5/10 x ¾ = 15/40

Brillantes: 3/10 x ¾ = 9/40
Diaz: 2/10 x ¾ = 6/40

Echarri: ¼, multiplied by 10/10 to make the denominator similar with the 3

partners.
So, Echarri’s share in the profits and losses will be 10/40

New P and L ratio: 15:9:6:10

21. A.

Cost of land (as per book)= P500,000

Cost of land (as agreed)= P350,000
Decrease in value= (P150,000)

Brillantes’ share in the revaluation of asset: (150,000) x 9/40 = (P33,750)

Brillantes’ capital after adjustment: P437,500 – 33,750 = P403,750

Since her heir wants to withdraw her capital equal to her interest after death, no
bonus will be recognized for the remaining partners, so the withdrawal will still be
P403,750.

22. D.

Cash Non- =Liabilities L/P - Naguit, Dionicio, Villena,

cash Naguit Capital Capital Capital
assets (1/4) (2/4) (1/4)
125,000 325,000 = 162,500 43,75 125,000 21,875 96,875
0
Realizatio 170,000 (200,000 = (7,500) (15,000) (7,500)
n of NCA )
(Jan)
 Payment (162,500) =(162,500)
of outside
liabs
Payment (5,000) = (1,250) (2,500) (1,250)
of
liquidation
expenses
(Jan.)
Balances 127,500 125,000 =0 43,75 116,250 4,375 88,125
before 0
cash
distribution

Schedule of Safe Payments:

Naguit (1/4) Dionicio (2/4) Villena (1/4)
Capital balances 116,250 4,375 88,125
before cash
distribution
Add: Loans 43,750 - -
payable to partner
Total partners’ 160,000 4,375 88,125
interest
Restricted interest: (31,250) (62,500) (31,250)
P125,000 possible
loss if this will not
be sold on Feb.
Balances 128,750.00 (58,125) 56,875.00
Restricted interest: (29,062.50) 58,125 (29,062.50)
possible loss of
P58,125 in case
Dionicio is insolvent
to cancel her
deficiency in the
ratio between
Naguit and Villena
FREE INTEREST – 99,687.50 0 27,812.50
cash distribution to
partners

23. A.

TSE= 4,300,000 + 550,000 + 2,000,000 + 400,000 + 1,500,000 – 150,000

TSE = P8,600,000
 24. C.

Cash collections for issuance of PS = 2,000,000 + 400,000

Cash collections for issuance of preference shares amounting to P2,400,000.
25. B.

BVPS = Ordinary Stockholders Equity / Ordinary Shares Outstanding

= P1,800,000 / 150,000
BVPS = P12.00

26. B.

Preference Shares Ordinary Shares Total

P200,000 P300,000 P500,000
Dividends in 60,000 P60,000
arrears:
(P300,000 x 10% x
2 years)
Current dividends: 30,000 30,000
(P300,000 x 10%)
Remaining 110,000 110,000
dividends to
ordinary
shareholders
Total P90,000 P110,000 P200,000
Dividend per share 3.00 5.50

27. A. (refer to solution above)

28. A.

Accounts Receivable Turnover = Net Credit Sales / Average Accounts

Receivable

NCS: P1,500,000
AR, beg: P200,000
AR, ending: AR, beg + NCS – Write-off – Collections
(200,000 + 1,500,000) – 50,000 – 800,000
= P850,000

ART = 1,500,000
(200,000 + 850,000) / 2

= 1,500,000
525,000
 ART = 2.857 OR 2.86 TIMES

29.B.

Percentage of Inc. / (Dec.) = (Current Year Amt. – Base year amt.) / Base year amt.
= (1,174,330 – 2,000,000) / 2,000,000
= -0.412835
Decreased by 41%.

30.C.
Debt to total assets ratio = 20%
Assets = Debts + Equity
100% = 20% + 80%
Equity to total assets ratio = Total equity / Total assets
80% = P500,000 / Total Assets
0.80 = P500,000 / Total Assets
Criss – Cross!
0.80 TA = 500,000
0.80 0.80

Total assets = P625,000

Current Assets = P625,000 x 75%
Current Assets = P468,750